Money managers need to think carefully about how they continue to grow their businesses and imprint in a post-Brexit world, said Elizabeth Corley, vice chairwoman, Allianz Global Investors.
Speaking at a House of Lords European Union financial affairs subcommittee meeting Wednesday, Ms. Corley highlighted U.K. money managers' important role not only in running domestic assets, but also on behalf of overseas clients. She also noted the sector has not been very good at talking about its role as an important center for money management.
“We have created a sort of national champion industry, which we don't talk terribly much about — and we are also a critically important crossroads for capital flowing into investment in companies. One of the things we need to think about as we move forward as an international trading center, (is) where have we got international advantage and competition advantage, and where do we wish to see that growing our business and our imprint in the world,” Ms. Corley said.
About two-fifths of the assets run in the U.K. are on behalf of external clients — half of which are in Europe, and the remainder elsewhere in the world. “The money we run here is larger than the largest three European asset management centers, for example, and we are second only to the U.S. in terms of scale.”
Even more important, however, is U.K. money management's role as “a very significant contributor to equity issuance, equity risk capital, which is essential obviously to growth. And so I think one of the things we do need to work closely on is what do we need to see as the seeds of future international expansion in how we move forward,” she said.
Members of the subcommittee also questioned the effect of the U.K. being granted equivalence post-Brexit — where non-European Union countries are deemed to have regulation and supervision equivalent to standards within the union.
Ms. Corley said there have been a number of attempts in the eight years since the global financial crisis toward consolidation of rules and standards. “There is no doubt that in financial services one has to have a dynamic and agile means of regulation and supervision.” She said the challenge with straightforward equivalence is that it is static. However, markets change and innovate and regulation shifts. “So anything that is assuming a static status quo is not going to work in practice,” she said. What will probably be key, she said, is “something beyond equivalence in terms of regulatory cooperation and joint working, and is consistent with an international framework of convergence on regulation.”